The Reserve Bank of India’s foreign exchange reserves fell by $3.8 billion to $524.52 billion in the week ending October 21, according to the most recent data. The current reserve level is the smallest since July 24, 2020.
The drop in reserves is primarily due to a drop in the RBI’s foreign currency assets, which fell by $3.6 billion in the week ending October 21.
According to analysts, the previous week’s drop in reserves was largely due to the RBI’s intervention in the currency market to support the rupee.
“It was the week in which the rupee touched a record low of 83.29 a dollar following weakness in the Asian currencies,” HDFC Securities research analyst Dilip Parmar said.
The rupee fell 0.4 per cent against the US dollar in the week ending October 21. Over the same time period, the US dollar index, which measures the US currency against six major currencies, rose 0.6 per cent.
Since Russia invaded Ukraine in late February, the RBI’s foreign exchange reserves have fallen by more than $100 billion. The reserves stood at $631.53 billion as of February 25.
Last month, RBI Governor Shaktikanta Das stated that revaluation in the face of a stronger dollar was responsible for 67 per cent of the drop in reserves so far this fiscal year.
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